US productivity up, UK industrial output and German factory orders fall

US productivity rose in the fourth quarter. Reuters reports:

Nonfarm business productivity, a gauge of how much a worker produces per hour, mounted at a 3 percent annual pace in the final three months of 2006, the Labor Department said on Wednesday...

Handily beating expectations on Wall Street for a 1.8 percent advance, the rise marked a big step up after a revised 0.1 percent third-quarter decline. Productivity in the third quarter was initially reported as a 0.2 percent gain...

"The strength of productivity meant that unit labor costs remained under control despite a 4.8 percent rise in hourly compensation," Ian Shepherdson, chief U.S. economist at High Frequency Economics, said in a research note. "These numbers ought not to be seen as unduly threatening by the Fed."

Unit labor costs, a gauge of inflation and profit pressures watched closely by the Fed, rose at a 1.7 percent annual rate, a big slowdown after a 3.2 percent gain in the previous three months. This was despite the jump in compensation per hour, which accelerated after a 3.1 percent third-quarter increase.

In other news, mortgage applications fell last week.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended Feb. 2 dipped 0.2 percent to 630.1. A four-week moving average of mortgage applications, which smooths the volatile weekly figures, moved down 1.6 percent.

Meanwhile, a Federal Reserve report yesterday showed that growth in consumer credit slowed in December. MarketWatch reports:

With credit-card debt growing at the slowest pace in nine months, consumer credit debt increased by $6 billion, or 3% annualized, in December, less than half the growth of November, the Federal Reserve reported Wednesday.

Total outstanding debt increased by a seasonally adjusted $6.01 billion in December to $2.4 trillion after a $13.7 billion, or 6.9%, gain in November.

There were also signs of cooling in Europe.

In the UK, Reuters reports that industrial output fell 0.1 percent in December as a sharp fall in oil and gas production offset a 0.2-percent increase in manufacturing output. Meanwhile, the British Retail Consortium said shop prices rose an annual 1.84 percent in January, down from 2.28 percent in December.

Earlier, Bloomberg reported that German manufacturing orders unexpectedly fell 0.2 percent in December.